Argentina's economy chief kicks off debt talks

Argentina's economy chief kicks off debt talks

Monday, July 7, 2014

NEW YORK (AP) — Argentina's economy minister kicked off in New York negotiations aimed at resolving a dispute with creditors over unpaid debts that could lead to the country's second default in 13 years.

In a much-anticipated meeting with a court-appointed mediator, Axel Kicillof reiterated his government's request that a New York judge presiding over the case extend a July 30 deadline for Argentina to pay some $1.5 billion awarded to bondholders.

The creditors are hedge funds that bought Argentine bonds on the cheap and then rejected Argentina's restructuring offer following its record $100 billion default in 2001.

Kicillof dodged a group of pushy journalists gathered outside the Park Avenue law office where the five-hour meeting took place and slipped into a black SUV without taking any questions. Onlookers surprised by the fuss chased the pack and screamed out "Derek Jeter, Derek Jeter," confusing the 42-year-old finance chief with the New York Yankees shortstop.

In a statement later, Kiciloff said that Argentina remains willing to continue dialogue aimed at a fair solution to the impasse that doesn't affect the vast majority of its creditors who exchanged the defaulted bonds for new ones and whose future payments are at risk.

U.S. District Judge Thomas Griesa has said it would be illegal for Argentina to make a payment to other bondholders without paying the holdouts. To that end he last month ordered Bank of New York Mellon Corp. to return to Argentina $539 million it had deposited at the bank to pay holders of restructured debt.

President Cristina Fernandez and her predecessor, her late husband Nestor Kirchner, have so far refused to negotiate with the plaintiffs led by New York billionaire Paul Singer's NML Capital Ltd., who spent more than a decade litigating for payment in full rather than agreeing to provide Argentina with debt relief.

Jay Newman, a money manager at an NML subsidiary, wrote in an editorial for the Financial Times on Monday that creditors are looking for concrete steps from Argentina but are willing to accept payment in bonds to overcome the impasse.

Analysts are cautiously optimistic a deal will be reached. They say another default could be devastating for South America's second-biggest economy, which is already teetering on the edge of recession and suffering from years of double-digit inflation and dollar shortages.

Even as Argentina continues to denounce creditors as "vulture funds," it's quietly been patching up relations with the International Monetary Fund and other official creditors in a bid to regain access to international markets.